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Revenue Commissioner Ward Einess, watched by Sen. Tom Bakk of Cook, tells the Senate Taxes Committee Thursday that the state would have a difficult time finding enough unpaid taxes to collect to fund tax breaks in a Bakk bill. Pioneer Photo/Don Davis

ST. PAUL -- Attempts to lure investments in small business and encourage people to rehabilitate historic buildings could produce jobs, Minnesota legislative Democrats say, and they are willing to bet state money on the idea.

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"I don't know how much stimulus this will provide, but we should give it a try," Sen. Tom Bakk, DFL-Cook, said Thursday.

Bakk's bill and a similar House measure are among the Minnesota Legislature's priorities this year because they are designed to produce jobs at a time when the rough economy has killed many jobs. While Bakk said he cannot predict how many new jobs to expect, he said the measure is worth a try.

"If all the things in here do not work, at least we are trying something," he said.

There are two major parts of the bills. One would provide a tax break up to $125,000 to "angel investors" who provide funding for an innovative small business. The other major part of the bill would deliver a similar tax break to people who invest in restoring historic buildings.

However, a tax break takes money out of the state budget and the major dispute about the bill is how to fund those breaks.

"We like the underlying bill," Revenue Commissioner Ward Einess said, but not how it is funded.

The House tax leader wants to partially fund the measure by forcing people not paying all of their taxes to pay the rest.

Rep. Ann Lenczewski, DFL-Bloomington, said there should be money available by making sure more people comply with tax laws, but Einess disagreed.

"We feel we have kind of exhausted that compliance," the commissioner said.

In recent years, as the state budget has tightened, the Revenue Department has worked harder to make sure all taxes are paid.

Lenczewski and Bakk met Thursday afternoon, trying to work out a compromise in hopes that the House and Senate could pass the jobs bill Monday, before lawmakers take a week-long Passover-Easter break.

The tax breaks would cost $8.8 million this year and $30.5 million in the next two-year budget.

Several other tax-related provisions, mostly designed to attract jobs, are included in the bills, such as a tax break for a European company to build a wind-turbine factory on the Iron Range and a related electric generator plant and headquarters in Duluth.

"This bill would be a lot bigger if it were up to me," Bakk said.

Members of Bakk's Senate Taxes Committee favored getting rid of a fuel tax rebate that provides $12.50 to compensate a low-income Minnesotan for recent gasoline tax increases. Senators said that is not enough to do any good for an individual, but the $30 million could fund the tax breaks to produce jobs.

Lenczewski disputed that logic.

"I am not going to take from poor people and give it to rich people," she said.

Besides just helping businesses and providing jobs, there is another reason Bakk said he wants the bill to pass: "People need a little dose of good news, a little glimmer of hope."

Don Davis works for Forum Communications Co., which owns the Bemidji Pioneer.